SDX has announced the result of the Kelvin-1 exploration well at South Disouq in Egypt. As I am on the move today I will write up my thoughts in detail tomorrow but having seen the share price this morning I thought it worth a quick comment.
The price fall has in my view overdone the bearish aspect of this well result, which was indeed an ambitious step-out from the rest of the structure and targeting a stratigraphic extension of the previously identified trap. The rest of the work on this prolific block is yet to be done and one, inexpensive duster will in my view make little or no difference to the value of the company.
To put this all into context the Moroccan campaign resulted in 7 from 9 which was better than all expectations and at South Disouq they are 2 from 3 with plenty of upside. With what they bring to the party they are success rates I would take any day of the week. Share weakness is a very good reason to add to holdings, a rare opportunity in this stock and with Brent crude trading at $79.55 this morning and the gas price also delivering top drawer margins in Morocco and Egypt the case is watertight.